What is an invoice An invoice is a commercial document that provides a detailed summary of goods or services, given by a seller to a buyer. It typically includes the quantity, description, price, total cost of the goods or services, and any taxes, discounts, or other fees. In addition, an invoice usually includes the payment…
In finance and business, profit is a vital indicator of a company’s success. When evaluating a company’s financial health, gross profit vs. net profit are two commonly used metrics. While both provide insights into a company’s profitability, their calculation methods and the information they convey differ. In this blog post, we will delve into the…
What Is Accumulated Depreciation? If you own a business, keeping track of your assets is crucial to your financial well-being. One important aspect of asset management is understanding accumulated depreciation and how it affects your balance sheet. So, what exactly is accumulated depreciation? In short, it’s the total depreciation expense charged to an asset since…
What is backup withholding tax? Backup withholding is tax withholding that requires a payer to withhold a certain percentage of payment to a recipient and remit it to the IRS. Backup withholding typically applies to certain types of income, such as interest, dividends, and other reportable payments. The backup withholding rate is currently set at…
Reconciliation in accounting refers to comparing two sets of financial records or statements to ensure that they agree and are accurate. It involves comparing the balances in the company’s accounting records with the corresponding balances in the bank statement or other financial records. What are the types of reconciliation in accounting There are several types…
Fixed Asset Turnover (FAT) is a financial ratio that measures a company’s efficiency in using its fixed assets to generate revenue. It’s the company’s net sales divided by the value of its fixed assets. The ratio shows as to how much of the revenue is generated for each dollar invested in fixed assets. Fixed asset…
Operating income is a financial measure that shows a company’s profit from its operations before accounting for non-operating expenses such as interest, taxes, and other income or losses. It is also known as earnings before interest and taxes (EBIT). Operating income is calculated by subtracting the cost of goods sold (COGS), selling and administrative expenses,…
In finance and accounting, numerous metrics and concepts are essential for businesses to understand to remain financially healthy and profitable. One such concept is net working capital, which refers to the amount of capital a business has available to operate and invest. In this blog, we will explore net working capital, how it is calculated…
In accounting, liabilities refer to the obligations a company or individual owes to others. These obligations arise from past transactions or events and require the entity to make a future payment or provide goods or services to settle the obligation. Liabilities are usually listed on the balance sheet as a separate category alongside assets and…
You may have come across the term “subordinated debt” but what exactly is it? Subordinated debt is a type of debt that ranks lower in priority than other forms of debt in the event of a company’s bankruptcy or liquidation. If a company runs into financial trouble, subordinated debt holders may be the last to…
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